Holding AGMs - some pointers for Entrepreneurs
Lawyers at VakilSearch tell you moreAs the name suggests, an Annual General Meeting has to be held every year. There are certain rules regarding where and when an annual general meeting can be held and these are governed by Section 166 of the Companies Act, 1956.
As entrepreneurs, many of you might be preparing to hold your Annual General Meetings, many for the first time. You might have doubts as to the procedure to hold the Annual General Meeting.
Section 166 (2) of the Companies Act, 1956
Let us hence look at the provisions of Section 166 (2) of the Companies Act, 1956:
(2) Every annual general meeting shall be called for a time during business hours, on a day that is not a public holiday, and shall be held either at the registeredoffice of the company or at some other place within the city, town or village in which the registered office of the company is situated
Provided that the CentralGovernment may exempt any class of companies from the provisions of this sub-section subject to such conditions as it may impose:
Provided further that –
(a) a public company or a private company which is a subsidiary of a public company, may by its articles fix the time for its annual general meetings and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meetings; and
(b) A private company which is not a subsidiary of a public company may in like manner and also a resolution agreed to by all the members thereof, fix the times as well as the place for its annual general meeting.
Analysis:
Now, on reading the highlighted portion mentioned prior, it does seem that a Company can only hold its Annual General Meetings in the place where its registered office is.
However, on reading the second proviso, it becomes clear that if you pass a resolution to that effect approved by all the members, you can hold the Annual General Meeting in any place.
So let us say for instance that you have incorporated the Company in Chennai, but all the directors are based in Bangalore.
Now, since it obviously more convenient to have the meeting in Bangalore, you can pass a resolution unanimously to have the meeting in Bangalore.
Alternatively, if you want something a little more exotic, and want a break from the rigors of corporate life as well, you can pass a resolution unanimously and have the meeting in Goa, or a destination of your choice.
Can I have the meeting on video conference?
Technically, there has to be quorum for you to hold the Annual General Meeting. So ‘presence’ of a minimum of 5 members in the case of public companies and 2 members in the case of private companies (or 1/3rd of the members, whichever is higher) is necessary for you to hold the meeting.
However, with an ever increasing global presence of our Indian Companies, the law has begun to allow presence via video conference as well.
This is a real blessing for Companies where members are scattered across the globe. And in small technology companies, this may often be the case.
So the answer to the question is yes, you are entitled to hold meetings via video conference as well.
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